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AMF Ultra Short Fund Subject of Fraud Investigation

By Adam Gana

Asset Management Fund's Ultra Short Fund (AMF) (NASDAQ: AULTX) has declined by more than 50% in value going the way of a number of ultra short bond funds this year: down the tubes.

Pitched as a conservative investment, AMF marketed itself as seeking to achieve current income "with a very low degree of share-price fluctuation." However, the fund was heavily invested in subprime-backed securities - in this case collateralized debt obligations (CDO) and adjustable rate mortgages (ARM), that plummeted in value in 2008 and 2009.

Most disturbing to investors is that AMF managers - Shay Assets Management, Inc. - continued to invest heavily in the risky mortgage backed securities CDO's and CMO's through the housing crises of 2008 and 2009.

A CDO is a pool of loans whose value and payments are derived from a portfolio of fixed-income underlying assets. CDOs are assigned different risk classes, whereby "senior" tranches are considered the safest securities. Interest and principal payments are made in order of seniority, so that junior tranches offer higher coupon payments (and interest rates) or lower prices to compensate for additional default risk. Since 2002, Warren Buffet has warned investors that these exotic financial products are financial weapons of mass destruction.

In its product literature, AMF Asset Management describes its Ultra Short Fund as designed to provide current income with a very low degree of share-price fluctuation. Instead, the fund has declined more than 15% this year.

Several investors who suffered losses in the AMF Ultra Short Fund are going to court and arbitration, charging the fund's managers and AMF with misrepresenting the fund and failing to inform hem about the concentration of risky mortgage related securities that the fund contained.

Napoli Bern Ripka, LLP is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses. If you have suffered losses as a rsult of an investment in the AMF fund or any ultra-short term bond fund please give us a call at (212) 267-3700.

Originally posted at InjuryBoard by Adam Gana

Full post as published by New York City Personal Injury Lawyer on September 17, 2009 (boomark / email).